China pledges $7B to PH

The Philippines is eyeing to sign at least three loan agreements with the Chinese government for infrastructure projects until the end of the year, according to the Department of Finance (DOF).

Maria Edita Tan, DOF assistant secretary, said the Philippine government has yet to sign loan agreements with China.

As of January, China has committed an estimated $7.34 billion in soft loans and grants to the Philippines for the implementation of 10 big-ticket projects, the construction of two bridges in Metro Manila and two drug rehabilitation facilities in Mindanao, and aid to rehabilitate Marawi City.

The DOF earlier said China will provide soft loans estimated at $234.92 million for the Kaliwa Dam Project and $72.49 million for the Chico River Pump Irrigation (facility) Project under the first basket of infrastructure projects presented by the Philippines for possible Chinese financing.

The P151-billion Philippine National Railways South Long Haul Line will also be financed by official development assistance (ODA) from China.

“For the Chico River we are scheduled tentatively (for loan signing) second to third quarter of 2018. For the Kaliwa Dam that would be sometime in third quarter to fourth quarter. For the South Long Haul, third to fourth quarter as well,” Tan said.

“The process is actually they have to go through the bidding, and then after which we would be able to identify how much is the loan, and then we have to go through our own process,” she said.

Tan said there’s also a need to secure all the necessary approvals which is why it’s taking a while.

“Afterwhich we will negotiate the loan and make it effective,” Tan said.

Ernesto Pernia, socioeconomic planning secretary, earlier said while availing loans from China appears to be more expensive versus that of Japan, there are also gains from such transaction with China.

Pernia previously said soft loans from Japan have an annual rate of less than one percent, usually ranging between 0.25 percent and 0.75 percent.

“China, at best, would be two to three percent. Although we haven’t really, I haven’t really signed loan agreements yet with China, in terms of the loan agreement. There can be gains also from these loan agreements with China, even compared with the other countries,” Pernia said.

“I guess vis-a-vis Japan, it’s clearly a disadvantage (borrowing) from China compared to Japan, but then Japan can only afford so much pressure on their ODA,” he added.

Pernia also said the Philippines prefers to have good relations with different countries.

“Also, (it is) politically correct...because (in) ODA, there are also political considerations. It is not purely economic and altruistic,” Pernia said.

China’s two to three percent interest rate is still “much better” than the commercial rate, he added.

Column of the Day

‘As an agency of the UN, the Office of the UN High Commissioner for Human Rights is expected to fulfill its duties within the framework set out by the purposes and principles of the UN Charter.’ – Chinese spokesman Lu Kang.

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